EX-99.1 2 d548030dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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   Contact:   

Robert Jaffe

Investor Relations

424-288-4098

zqk@quiksilver.com

Quiksilver Reports Fiscal 2013 Second Quarter Financial Results

—Company Provides Updated Guidance for Fiscal 2013—

Huntington Beach, California, June 6, 2013—Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the fiscal 2013 second quarter ended April 30, 2013.

“We recently announced a multi-year profit improvement plan designed to enhance the performance of our three flagship brands, Quiksilver, Roxy and DC, and accelerate our path to sustained profitable growth,” said Andy Mooney, President and Chief Executive Officer of Quiksilver, Inc. “With a reorganized management structure and our new leadership team largely in place, we have begun working toward globalizing key functions and gaining efficiencies to reap the benefits of our size and scale. We believe that, over time, our new focus and structure will allow us to significantly improve profitability, working capital efficiency and competitive positioning.

“Our second quarter performance reflects net revenue declines primarily within our EMEA wholesale channel, along with lower gross margins across all three flagship brands, particularly within DC,” continued Mooney. “We continued to liquidate prior seasons’ inventory and meaningfully lowered operating expenses.”

Please refer to the accompanying tables for a reconciliation of GAAP results to certain non-GAAP results for the second quarter and first half ended April 30, 2013 and 2012, net revenues in historical and constant currency, and a definition of our emerging markets.

Fiscal 2013 Second Quarter Review:

The following comparisons refer to the second quarter of fiscal 2013 versus the second quarter of fiscal 2012.

Net revenues were $459 million compared with $492 million, and were down 5%, or $25 million, in constant currency.

 

   

Americas net revenues increased 3% to $229 million from $221 million, and were up 4% in constant currency.

 

   

EMEA net revenues decreased 16% to $165 million from $196 million, and were down 14% in constant currency.

 

   

APAC net revenues decreased 14% to $64 million from $74 million, and were down 9% in constant currency.

Gross margin decreased to 46.0% of net revenues compared with 49.2%, primarily driven by increased discounting and clearance of DC product, increased discounting in Europe across the company’s three flagship brands, and inventory write downs related to certain brands and product categories which were discontinued in the second quarter.

SG&A decreased to $218 million compared with $224 million, primarily due to the company’s ongoing expense reduction efforts which resulted in savings across several expense categories.


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Quiksilver, Inc. Reports Second Quarter Fiscal 2013 Financial Results

June 6, 2013

Page 2 of 3

 

Non-cash asset impairments were $5.3 million compared with $0.4 million.

Foreign currency gain was $2.6 million compared with $0.6 million.

Net loss attributable to Quiksilver, Inc. was $32 million, or $0.19 per share, compared with $5 million, or $0.03 per share.

Pro-forma loss, which excludes the after-tax impact of restructuring and other special charges and non-cash asset impairments from net loss attributable to Quiksilver, Inc., was $20 million and $2 million, or $0.12 per share and $0.01 per share, respectively.

Pro-forma Adjusted EBITDA was $19 million compared with $41 million, with the decline largely driven by gross margin and net revenue declines.

Fiscal 2013 Q2 Net Revenue Highlights:

Net revenues (in constant currency) by brand and channel for the second quarter of fiscal 2013 compared with the second quarter of fiscal 2012 were as follows.

Brands (constant currency):

 

   

Quiksilver decreased 10% to $182 million;

 

   

Roxy decreased 4% to $129 million; and,

 

   

DC increased 1% to $129 million.

Distribution channels (constant currency):

 

   

Wholesale decreased 7% to $344 million;

 

   

Retail decreased 5% to $91 million. Second quarter same store sales in company-owned retail stores decreased 4% on a global basis. Company-owned retail stores totaled 564 compared with 549 at the end of fiscal 2012 second quarter; and,

 

   

E-commerce was up 31% to $23 million.

Emerging markets generated net revenue growth of 13% in constant currency.

Guidance for Fiscal 2013:

Based on its current outlook, the company revised its fiscal 2013 financial guidance as follows:

 

   

Pro-forma adjusted EBITDA for the second half of fiscal 2013 is expected to be greater than the $91 million achieved during the second half of fiscal 2012;

 

   

Capital expenditures for fiscal 2013 are expected to decrease by at least 10% from the $66 million recorded in fiscal 2012.

The foregoing guidance updates and supersedes the company’s prior guidance for fiscal 2013.


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Quiksilver, Inc. Reports Second Quarter Fiscal 2013 Financial Results

June 6, 2013

Page 3 of 3

 

About Quiksilver:

Quiksilver, Inc., one of the world’s leading outdoor sports lifestyle companies, designs, produces and distributes branded apparel, footwear and accessories. The company’s apparel and footwear brands, inspired by a passion for outdoor action sports, represent a casual lifestyle for young-minded people who connect with its boardriding culture and heritage. The company’s Quiksilver, Roxy, and DC brands have authentic roots and heritage in surf, snow and skate. The company’s products are sold in more than 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, other specialty stores, select department stores and through various e-commerce channels. Quiksilver’s corporate headquarters are in Huntington Beach, California.

Forward looking statements:

This press release contains forward-looking statements including, but not limited to, statements regarding management’s expectations for improved profitability, working capital efficiency, and competitive positioning as well as management’s current expectations regarding pro-forma adjusted EBITDA and capital expenditures for the second half of fiscal 2013, and other future activities. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Quiksilver undertakes no obligation to update these statements, which are made only as of the date of this press release. For the factors that could cause actual results to differ materially from expectations, please refer to Quiksilver’s SEC filings and specifically the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

* * * * *

NOTE: For further information about Quiksilver, Inc., please visit our website at www.quiksilverinc.com. We also invite you to explore our brand sites, www.quiksilver.com, www.roxy.com, www.dcshoes.com and www.moskova.com.

FINANCIAL TABLES FOLLOW


QUIKSILVER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

     Second quarter ended
April 30,
    First half ended
April 30,
 
     2013     2012     2013     2012  
In thousands, except per share amounts                         

Revenues, net

   $ 458,748      $ 492,213      $ 889,766      $ 941,834   

Cost of goods sold

     247,612        250,064        458,923        471,735   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     211,136        242,149        430,843        470,099   

Selling, general and administrative expense

     218,204        224,010        443,463        454,425   

Asset impairments

     5,332        415        8,500        415   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (12,400     17,724        (21,120     15,259   

Interest expense

     15,289        15,585        30,796        30,630   

Foreign currency (gain) loss

     (2,618     (609     555        (2,459
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before provision for income taxes

     (25,071     2,748        (52,471     (12,912

Provision for income taxes

     7,147        7,155        10,371        12,405   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (32,218     (4,407     (62,842     (25,317

Less: net income attributable to non-controlling interest

     (177     (713     (682     (2,408
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Quiksilver, Inc.

   $ (32,395   $ (5,120   $ (63,524   $ (27,725
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to Quiksilver, Inc. (basic and diluted):

   $ (0.19   $ (0.03   $ (0.38   $ (0.17

Weighted average common shares outstanding (basic and diluted):

     166,815        163,953        166,282        163,655   


QUIKSILVER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

     April 30, 2013     April 30, 2012  
In thousands             

ASSETS

    

Current Assets

    

Cash and cash equivalents

   $ 47,893      $ 79,177   

Trade accounts receivable (net of allowance of $57,134 and $53,593, respectively)

     375,336        370,974   

Other receivables

     31,933        26,250   

Inventories

     366,304        358,915   

Deferred income taxes - short-term

     25,696        17,752   

Prepaid expenses and other current assets

     33,457        31,697   
  

 

 

   

 

 

 

Total Current Assets

     880,619        884,765   

Fixed assets, net

     232,955        240,424   

Intangible assets, net

     138,749        137,212   

Goodwill

     272,764        268,340   

Other assets

     43,759        54,948   

Deferred income taxes - long-term

     114,391        110,752   
  

 

 

   

 

 

 

Total Assets

   $ 1,683,237      $ 1,696,441   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current Liabilities

    

Lines of credit

   $ —        $ 13,517   

Accounts payable

     185,570        190,647   

Accrued liabilities

     102,480        108,770   

Current portion of long-term debt

     44,834        22,840   

Income taxes payable

     451        3,068   
  

 

 

   

 

 

 

Total Current Liabilities

     333,335        338,842   

Long-term debt, net of current portion

     769,108        732,916   

Other long-term liabilities

     34,958        33,790   
  

 

 

   

 

 

 

Total Liabilities

     1,137,401        1,105,548   

Equity

    

Common stock

     1,705        1,684   

Additional paid-in capital

     560,303        544,809   

Treasury stock

     (6,778     (6,778

Accumulated deficit

     (106,845     (60,290

Accumulated other comprehensive income

     77,799        95,096   
  

 

 

   

 

 

 

Total Quiksilver, Inc. Stockholders’ Equity

     526,184        574,521   

Non-controlling interest

     19,652        16,372   
  

 

 

   

 

 

 

Total Equity

     545,836        590,893   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 1,683,237      $ 1,696,441   
  

 

 

   

 

 

 


QUIKSILVER, INC. AND SUBSIDIARIES

INFORMATION RELATED TO OPERATING SEGMENTS (UNAUDITED)

 

In thousands    Second quarter ended
April 30,
    First half ended
April 30,
 
     2013     2012     2013     2012  

Revenues, net:

        

Americas

   $ 228,703      $ 220,975      $ 414,987      $ 426,383   

EMEA

     165,189        195,554        336,364        364,428   

APAC

     63,900        74,026        136,776        148,619   

Corporate operations

     956        1,658        1,639        2,404   
  

 

 

   

 

 

   

 

 

   

 

 

 
     458,748        492,213        889,766        941,834   

Gross Profit:

        

Americas

   $ 92,696      $ 97,709      $ 173,555      $ 185,637   

EMEA

     87,961        108,997        186,850        210,769   

APAC

     31,634        35,963        70,911        74,103   

Corporate operations

     (1,155     (520     (473     (410
  

 

 

   

 

 

   

 

 

   

 

 

 
     211,136        242,149        430,843        470,099   

SG&A Expense:

        

Americas

   $ 84,999      $ 88,407      $ 173,073      $ 177,888   

EMEA

     80,976        83,202        164,210        169,298   

APAC

     37,756        40,002        74,962        77,241   

Corporate operations

     14,473        12,399        31,218        29,998   
  

 

 

   

 

 

   

 

 

   

 

 

 
     218,204        224,010        443,463        454,425   

Asset Impairments:

        

Americas

   $ 5,322      $ 415      $ 6,943      $ 415   

EMEA

     10        —          1,557        —     

APAC

     —          —          —          —     

Corporate operations

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 
     5,332        415        8,500        415   

Operating Income (Loss):

        

Americas

   $ 2,375      $ 8,887      $ (6,461   $ 7,334   

EMEA

     6,975        25,795        21,083        41,471   

APAC

     (6,122     (4,039     (4,051     (3,138

Corporate operations

     (15,628     (12,919     (31,691     (30,408
  

 

 

   

 

 

   

 

 

   

 

 

 
     (12,400     17,724        (21,120     15,259   

Definition of emerging markets:

The Company’s references to emerging markets in this press release refer to net revenues generated in Brazil, Mexico, Korea, China, Indonesia, Taiwan and Russia, collectively.


QUIKSILVER, INC. AND SUBSIDIARIES

GAAP TO PRO-FORMA NET LOSS RECONCILIATION (UNAUDITED)

 

     Second quarter ended
April 30,
    First half ended
April 30,
 
     2013     2012     2013     2012  
In thousands, except per share amounts                         

Net loss attributable to Quiksilver, Inc.

   $ (32,395   $ (5,120   $ (63,524   $ (27,725

Restructuring charges, net of tax of $221, $600, $625 and $800, respectively

     7,049        2,966        9,650        5,242   

Non-cash asset impairments, net of tax of $136, $32, $692 and $32, respectively

     5,196        383        7,808        383   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pro-forma net loss

     (20,150     (1,771     (46,066     (22,100

Pro-forma loss per share attributable to Quiksilver, Inc. (basic and diluted):

   $ (0.12   $ (0.01   $ (0.28   $ (0.14

Weighted average common shares outstanding (basic and diluted):

     166,815        163,953        166,282        163,655   


QUIKSILVER, INC. AND SUBSIDIARIES

ADJUSTED EBITDA & PRO-FORMA ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

 

     Second quarter ended
April 30,
    First half ended
April 30,
 
     2013     2012     2013     2012  
In thousands                         

Net loss attributable to Quiksilver, Inc.

   $ (32,395   $ (5,120   $ (63,524   $ (27,725

Provision for income taxes

     7,147        7,155        10,371        12,405   

Interest expense

     15,289        15,585        30,796        30,630   

Depreciation and amortization

     12,808        14,163        25,027        27,125   

Non-cash stock-based compensation expense

     3,887        5,423        11,223        12,400   

Non-cash asset impairments

     5,332        415        8,500        415   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     12,068        37,621        22,393        55,250   

Restructuring and other special charges

     6,833        3,566        9,838        6,042   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pro-forma Adjusted EBITDA

     18,901        41,187        32,231        61,292   

Definition of Adjusted EBITDA and Pro-forma Adjusted EBITDA:

Adjusted EBITDA is defined as net income (loss) attributable to Quiksilver, Inc. before (i) interest expense, (ii) (benefit) provision for income taxes, (iii) depreciation and amortization, (iv) non-cash stock-based compensation expense and (v) non-cash asset impairments. Pro-forma Adjusted EBITDA is defined as Adjusted EBITDA excluding restructuring and other special charges (including, but not limited to, reserves and other charges associated with restructuring activities, non-operating charges for gains and losses on lease exit activities, as well as severance and other employee termination costs as a result of downsizing and reorganization). Adjusted EBITDA and Pro-forma Adjusted EBITDA are not defined under generally accepted accounting principles (“GAAP”), and may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA and Pro-forma Adjusted EBITDA, along with other GAAP measures, as measures of profitability because Adjusted EBITDA and Pro-forma Adjusted EBITDA compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments, the effect of non-cash stock-based compensation expense and restructuring and other special charges. We believe EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility and the expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by us. We remove the effect of asset impairments from Adjusted EBITDA for the same reason that we remove depreciation and amortization as it is part of the non-cash impact of our asset base. We also remove from Pro-forma Adjusted EBITDA the impact of certain reserves and charges associated with restructuring activities, non-operating charges for gains and losses on lease exit activities, as well as severance and other employee termination costs as these costs are not typically part of normal, day-to-day operations. Adjusted EBITDA and Pro-forma Adjusted EBITDA have limitations as profitability measures in that they do not include the interest expense on our debts, our provisions for income taxes, the effect of our expenditures for capital assets and certain intangible assets, the effect of non-cash stock-based compensation expense, the effect of asset impairments and the effect of restructuring and other special charges.


QUIKSILVER, INC. AND SUBSIDIARIES

SUPPLEMENTAL EXCHANGE RATE INFORMATION

(Unaudited)

In order to better understand growth rates in our operating segments, we make reference to constant currency. Constant currency reporting improves visibility into actual growth rates as it adjusts for the effect of changing foreign currency exchange rates from period to period. Constant currency is calculated by taking the ending foreign currency exchange rate (for balance sheet items) or the average foreign currency exchange rate (for income statement items) used in translation for the current period and applying that same rate to the prior period. The following table presents revenues by segment in both historical currency and constant currency for the second quarter ended April 30, 2013 and 2012 (in thousands):

 

     Americas     EMEA     APAC     Corporate      Total  

Historical currency (as reported):

           

April 30, 2013

   $ 228,703      $ 165,189      $ 63,900      $ 956       $ 458,748   

April 30, 2012

     220,975        195,554        74,026        1,658         492,213   

Percentage increase (decrease)

     3     -16     -14        -7

Constant currency (current year exchange rates):

           

April 30, 2013

     228,703        165,189        63,900        956         458,748   

April 30, 2012

     219,240        192,532        69,870        1,654         483,296   

Percentage increase (decrease)

     4     -14     -9        -5